Bill Overview
Title: FAITH Act of 2022
Description: This bill establishes the Natural Disaster Risk Reinsurance Program within the Department of the Treasury. States may voluntarily participate in the program. The program provides payments to states for damages from a natural disaster not covered by the National Flood Insurance Program for amounts in excess of trigger amounts. These trigger amounts are calculated by the National Academy of Sciences. States must present a plan that ensures the coverage of losses by insurers not exceeding the trigger amount. States must also pledge to repay the full amount provided by the program within 10 years.
Sponsors: Rep. Crist, Charlie [D-FL-13]
Target Audience
Population: Homeowners affected by natural disasters with incomplete insurance coverage
Estimated Size: 60000000
- The FAITH Act of 2022 focuses on providing financial support for natural disaster recovery, specifically through reinsurance for damages not covered by the National Flood Insurance Program.
- Homeowners in disaster-prone areas, particularly those areas where damages exceed those covered by standard insurance, would benefit from this program.
- This could involve people living in regions frequently affected by hurricanes, tornadoes, floods, or wildfires not typically covered by flood insurance.
- The act encourages states to set up plans to manage disaster-related insurance on a larger scale, likely benefiting homeowners indirectly by stabilizing state insurance facilities and disaster recovery plans.
- Globally, the act itself pertains specifically to the United States, influencing only U.S. states and homeowners.
Reasoning
- The FAITH Act targets homeowners in areas frequently affected by natural disasters who may not have complete insurance coverage.
- Those living in high-risk areas for hurricanes, floods, and wildfires are most likely to experience both immediate and long-term benefits from the policy.
- Many homeowners are indirectly impacted through improved state disaster management capabilities which stabilize insurance markets and reduce the risk spike after disasters.
- The budget limits imply that a full nationwide coverage is unlikely, focusing instead on key vulnerable regions.
- The simulation includes both impacted individuals and those not affected significantly, reflecting common situations in the population.
Simulated Interviews
Elementary School Teacher (Houston, Texas)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- I'm hopeful the FAITH Act can help with rebuilding after floods.
- Insurance usually doesn't cover everything, so extra support is welcome.
- State programs may stabilize premiums over time.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 4 |
| Year 10 | 8 | 4 |
| Year 20 | 7 | 3 |
Real Estate Agent (Miami, Florida)
Age: 32 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- As a real estate agent, stabilized insurance helps in selling properties.
- More comprehensive state plans would help avoid huge unexpected costs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Retired (Los Angeles, California)
Age: 58 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 8/20
Statement of Opinion:
- It's difficult to find insurers willing to cover wildfires.
- I hope this program would help us after disasters, financing the recovery.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 4 |
| Year 20 | 7 | 4 |
Software Developer (New York, New York)
Age: 29 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 16/20
Statement of Opinion:
- I don't think it impacts me directly, but it's good for those in af-risk areas.
- State preparedness could prevent big hikes in my insurance though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 8 | 8 |
Nurse (Wilmington, North Carolina)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- We're always worried about not having enough coverage.
- Such policies can help lessen our financial anxiety during hurricanes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 4 |
| Year 20 | 7 | 4 |
Small Business Owner (Baton Rouge, Louisiana)
Age: 52 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- It's tough when insurance coverage isn’t enough.
- Any state help would be a big relief post-disaster.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 3 |
Environmental Scientist (Seattle, Washington)
Age: 46 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- The policy shouldn't impact me directly but should help others in need.
- It's important for states to be ready for increasing natural disasters.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 6 |
Chef (New Orleans, Louisiana)
Age: 41 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- Policies addressing premium spikes would help homeowners here.
- Risk mitigation would be greatly appreciated.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 3 |
Freelance Writer (Kansas City, Kansas)
Age: 34 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- The policy might provide more options after disasters.
- We could do with better insurance regulations for everyone.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 6 |
Retired (Phoenix, Arizona)
Age: 62 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 13/20
Statement of Opinion:
- The FAITH Act could provide a safety net where insurance lacks.
- It's necessary for states to manage disaster funds better.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Cost Estimates
Year 1: $1000000000 (Low: $800000000, High: $1200000000)
Year 2: $1050000000 (Low: $850000000, High: $1250000000)
Year 3: $1100000000 (Low: $900000000, High: $1300000000)
Year 5: $1200000000 (Low: $950000000, High: $1400000000)
Year 10: $1500000000 (Low: $1200000000, High: $1800000000)
Year 100: $2000000000 (Low: $1800000000, High: $2200000000)
Key Considerations
- The voluntary nature of the program could lead to variability in cost estimates.
- Repayment by states is not guaranteed, especially if high-frequency disasters challenge state budgets.
- The act does not cover all natural disaster types, potentially leaving gaps in protection.
- Availability of affordable reinsurance is crucial for its success, as is state compliance with plan requirements.